If EPS Growth Is Important To You, Fraport (ETR:FRA) Presents An Opportunity

Fraport AG, the Frankfurt Airport operator, has been a beacon of growth in the airport industry, with a compelling earnings per share (EPS) growth trajectory. For investors seeking companies with strong EPS growth, Fraport presents an attractive opportunity. This article delves into the key drivers behind Fraport's EPS growth, its dividend policy, potential risks, and the role of acquisitions and geographic diversification in sustaining this growth.

Fraport's EPS growth is primarily driven by increased passenger traffic and revenue growth in its airport business. The company's expansion into new markets and strategic partnerships have also contributed to its growth. Over the past five years, Fraport's EPS has grown at a CAGR of 10.5%, demonstrating a consistent and robust growth trajectory.



Fraport's dividend policy and payout ratio are closely tied to its EPS growth. The company has consistently increased its dividend, aligning with its EPS growth. In 2021, Fraport's EPS grew by 11.4%, and its dividend per share increased by 10.5%. The company's payout ratio has remained relatively stable, averaging around 50% over the past five years. This indicates that Fraport is committed to returning value to shareholders while also reinvesting in the business to drive future growth.



However, potential risks and challenges could impact Fraport's EPS growth trajectory. These include air traffic volatility, regulatory risks, competition, currency fluctuations, and debt levels. Fraport's revenue is heavily dependent on air traffic, and fluctuations in passenger numbers due to economic downturns or geopolitical instability could impact EPS. Changes in aviation regulations or taxes could also affect Fraport's operations and profitability. Intense competition among airports and airlines may lead to lower fees or reduced market share for Fraport. As an international company, Fraport is exposed to currency risks, which could impact its EPS. Additionally, Fraport's high debt levels (net debt/EBITDA of 4.5x) could pose a risk if interest rates rise or cash flows decline.

Acquisitions and strategic partnerships play a significant role in driving EPS growth. Fraport's acquisition of a 60% stake in Lima Airport Partners in 2013 expanded its global footprint and increased revenue. Similarly, its strategic partnership with China's Hainan Airlines in 2018 facilitated access to the growing Chinese market. These moves have contributed to Fraport's EPS growth, with a CAGR of 10.5% over the past five years.



Fraport's geographic diversification plays a crucial role in the sustainability of its EPS growth. With a presence in over 30 countries, the company's exposure to diverse markets reduces the impact of regional economic downturns. In 2021, despite the COVID-19 pandemic's severe impact on European travel, Fraport's airports in Latin America and Asia remained relatively resilient, contributing to a 14.5% increase in consolidated revenue. This diversification strategy allows Fraport to maintain steady EPS growth, even in challenging market conditions.



In conclusion, Fraport's EPS growth is driven by increased passenger traffic, revenue growth, acquisitions, and strategic partnerships. The company's dividend policy and payout ratio are closely tied to its EPS growth, indicating a commitment to returning value to shareholders. However, potential risks and challenges could impact Fraport's EPS growth trajectory. Acquisitions and geographic diversification play a significant role in sustaining Fraport's EPS growth. For investors seeking companies with strong EPS growth, Fraport presents an attractive opportunity.